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Molasses is a thick dark liquid acquired by boiling down juice from sugarcane; especially during refining. It is converted into ethanol fuel through bio chemical process based on fermentation. Ethanol as fuel helps a great lot in lessening environmental degradation. The ethanol fuel is a cheap renewable fuel and it does not replete the resources as in the case of gasoline. On an average from one ton of molasses 240 to 270 liters of ethanol fuel is recovered. Ethanol is conveniently prepared and no sophisticated production instrument and technological know-how is required. In general the huge profits derived from ethanol fuel production have led to reducing the production cost for the sugar industry and raising the products competitiveness on an international scale.

Brazil is the first country in the world to successfully exploit ethanol as an alternative to gasoline or blend a certain percentage with gasoline for the use in the motor transport industry. By the middle of 1980’s, 96 percent of all new cars sold were using ethanol fuel. When the global oil prices dropped in 199o’s the Brazilian started buying gasoline cars. Up till 2003, hardly 10 percent of new cars sold in Brazil were using ethanol fuel. In the year 2004 a dramatic change took place with the introduction of ‘flexi cars’ which were operated by using ethanol fuel or gasoline or with a mixture of both fuels in different proportions. Currently there are ‘dual fuel’ cars and they operate by using 25 percent alcohol and 75 percent gasoline.

In unspecified places of Brazil, the price of one liter of alcohol is 40 to 45 percent lower than price of gasoline. It is interesting to know the fact that motor cars that use alcohol consume more fuel per kilometer than (gasoline motors), it costs 30 percent less to market alcohol than it cost to market gasoline which is a plus point for alcohol. Further alcohol operational cost is lower as compared to gasoline.

In United States the Bush administration greatly emphasized the utility of alternate resources, including ethanol, as a way to avoid US reliance on gasoline. Presently US cars consume as much ethanol as Brazilian cars. In United States the ethanol consumption very frequently involve a blend of ethanol and gasoline, at a dimension of 10 percent ethanol and 90 percent gasoline. Philippine and Indonesia which have sugar industries are extracting ethanol fuel from molasses. Both the countries have mandated ethanol blended usage nationwide. In India the government has made mandatory 5 percent blending and the distillers there are producing 1.3 billion liters ethanol out of 2.82 billion liters installed capacity. India itself has over 450 sugar mills and many of these could diversify into fuel ethanol production.

In the global ethanol production US constitute 65.5 percent, Asia Pacific 19.6 percent, Europe 13.2 percent and Africa 1.7 percent.  About 70 percent of world ethanol production is derived from the fermentation of sugar crops, including sugarcane, sugar beets or molasses. Brazil and many tropical countries use sugarcane or molasses whereas France the largest producer of Europe uses mostly sugar beets. United States and Eastern Canada mainly uses kernels. In China, corn, cassana and sweet potatoes are used. In Italy ethanol is extracted from waste from wine manufacture. It has been estimated that around 80 percent of world molasses is used for alcoholic production.

Pakistan is deficient in fuel and is spending billion of dollars on import of fuel from abroad. This is causing a drain on its valuable foreign exchange earnings. The oil and gas resources are slowly fading away. The transport sector in Pakistan has a major share in energy consumption. About 1.2 million tonnes of gasoline was utilized by this sector during the period 2005-06. In big cities like Karachi, Lahore and Faisalabad there is total environmental deteriorations. In this context its transport sector urgently requires development of environment friendly resources such as ethanol from molasses to meet its energy requirement. According to one of the estimates if 5 to 10 percent is met from ethanol in the transport sector there could be an annual saving of US$200 to US$400 per year. Beside this there will be reduction in environmental degradation.

Pakistan 78 sugar mills produces on an average of about 54 million tons sugar per annum. Pakistan had a record production of 63 million tonnes sugar in the year 2007-08. The average estimated production of molasses is about 1.94 million metric tonnes per annum. During 2008-09 about 2 million metric tons of molasses were produced. Out of which about 0.4 million metric tons of molasses were exported and the rest 1.6 million metric tons was for ethanol industry. The export of ethanol grew from US$52.5 million in 2004-05 to over US$ 207 million in 2007-08. Currently over 50 percent locally produced ethanol is exported at an average price of US$500 per metric tonne. Ethanol is mainly exported to Europe, Far Eastern (Korea, Japan, Taiwan and Taiwan and the Philippines) and Middle East (Dubai and Saudi Arabia).

In view of the huge spending on import of fuel the FBR on the directive of the government imposed 15 percent regulatory duty on molasses. The Pakistan Sugar Mills Association and molasses exporters opposed tooth and nail by saying that this would benefit only four or five distillers and that the Pakistan’s exporters would have to cancel deals with their European buyers, and renegotiate with them. According to them the export of molasses will substantially erode the earning and jeopardize payment to growers. They say that the decision has been made under the influence of some individuals who are engaged in the business of ethanol rather than on economic consideration. According to analysts the international price of alcohol is intimately akin to the global crude market. The government argues that 15 percent regulatory duty is imposed on national interest and it has discouraged the export of molasses in view of the expected shortage of production of molasses this year.

According to the Petroleum Ministry officials the Oil Marketing plan to invest Rs4.5 billion to offer ethanol blended gasoline at retail petrol pump station within the next one year, with the major of total coming from PSO. The government has decided to exempt the ethanol blended gasoline from the general sale tax of around 16 percent. PSO has already started working on this project and is expected to offer gasoline blended with 10 percent ethanol at thirty retail pump by this year. It is expected that ethanol blended gasoline will be cheaper than gasoline and will improve the vehicles efficiency and help lessen the air pollution in the environment.